In our initiation of the hospital sector, we look at the three listed private hospital providers, Mediclinic (MEI), Life Healthcare (LHC) and Netcare (NTC), amid increased regulatory scrutiny on the affordability of healthcare. We believe primary healthcare is growing in South Africa with patients visiting public clinics first in case of emergencies but we are concerned that the ageing skilled nurse base, together with the young, low-skilled cohort, could pose a challenge to growth. We are positive on MEI’s Middle East operations but we think MEI’s Swiss operations will continue to be a thorn. We believe an opportunity for growth exists for LHC within the UK’s diagnostics market, as LHC currently only manages c.1% of the market. We are pleased of NTC’s Akeso acquisition as it is a step in the right direction towards addressing outmigration of care and funder cost management initiatives affecting acute care and in-hospital admissions.
